Amended Divestiture Plan Adds Stores,
Facilities and Banner Names to
Enhance Competition in Overlap Geographies and to Address Regulator
Concerns
CINCINNATI, April 22,
2024 /PRNewswire/ -- The Kroger Co. (NYSE: KR) and
Albertsons Companies Inc. (NYSE: ACI) announced today that they
have amended their definitive agreement with C&S Wholesale
Grocers, LLC (C&S) for the sale of assets in connection with
their proposed merger previously announced on October 14, 2022. This amended package modifies
and builds on the initial divestiture package that was announced on
September 8, 2023.
The amended divestiture package responds to concerns raised by
federal and state antitrust regulators regarding the original
agreement. The enhanced divestiture package includes a modified and
expanded store set and additional non-store assets to further
enable C&S to operate competitively following the completion of
the proposed merger. The companies believe the amended divestiture
package will bolster their position in regulatory challenges to the
proposed merger, including pending court proceedings.
"We have reached an agreement with C&S for an updated
divestiture package that maintains Kroger's commitments to
customers, associates and communities, addresses concerns raised by
regulators, and will further ensure that C&S can successfully
operate the divested stores as they are operated today," said
Rodney McMullen, Kroger's Chairman
and CEO. "Importantly, the updated divestiture plan continues to
ensure no stores will close as a result of the merger and that all
frontline associates will remain employed, all existing collective
bargaining agreements will continue, and associates will continue
to receive industry-leading health care and pension benefits
alongside bargained-for wages. Our proposed merger with Albertsons
will bring lower prices and more choices to more customers and
secure the long-term future of unionized grocery jobs."
The proposed merger will create meaningful and measurable
benefits for America's consumers, Kroger and Albertsons Cos.
associates, and communities that both Kroger and Albertsons Cos.
serve by expanding access to fresh, affordable food and
establishing a more compelling alternative to large, non-union
retailers. This updated divestiture plan marks another next step
toward the completion of the merger by adding a well-capitalized
competitor into new geographies.
"We are confident this expanded divestiture package will provide
the stores, supporting assets and expert operators needed to ensure
these stores continue to successfully serve their communities for
many generations to come," said Eric
Winn, CEO of C&S. "C&S is a leader in the grocery
industry, and we are excited for this expansion of our current
retail business, which is a key part of our long-term growth
strategy. We look forward to welcoming storied banners, quality
private label brands, and a team of experienced retail associates
into the C&S family. This amended agreement enables C&S's
heritage of selection, value and customer service to continue our
legacy of braggingly happy customers."
Transaction Details
The updated divestiture package
increases the total store count by 166 to include 579 stores that
will be sold to, and continue operating as they do today by the new
owner, C&S.
It maintains the sale to C&S of the QFC, Mariano's and Carrs
banner names. Under the amended agreement, Kroger will also sell
the Haggen banner to C&S. Stores currently under these banners
that are retained by Kroger will be re-bannered into one of the
retained Kroger or Albertsons Cos. banners following the close of
the transaction with C&S.
Under the amended agreement, C&S will license the Albertsons
banner in California and
Wyoming and the Safeway banner in
Arizona and Colorado. In these states, Kroger will
re-banner the retained Albertsons and Safeway bannered stores
following the closing of the merger. Kroger will maintain the
Albertsons and Safeway banners in the remaining states.
The number of stores contained in the divestiture plan by
geography is as follows:
- WA: 124 Albertsons Cos. and Kroger stores
- CA: 63 Albertsons Cos. stores
- CO: 91 Albertsons Cos. stores
- OR: 62 Albertsons Cos. and Kroger stores
- TX/LA: 30 Albertsons Cos. stores
- AZ: 101 Albertsons Cos. stores
- NV: 16 Albertsons Cos. stores
- IL: 35 Albertsons Cos. and Kroger stores
- AK: 18 Albertsons Cos. stores
- ID: 10 Albertsons Cos. stores
- NM: 9 Albertsons Cos. stores
- MT/UT/WY: 11 Albertsons Cos. stores
- DC/MD/VA/DE: 9 Harris Teeter stores
The above stores (regardless of banner) will be sold by Kroger
to C&S following the closing of the merger with Albertsons
Cos.
In connection with the additional stores being conveyed to
C&S, the updated divestiture package includes increased
distribution capacity through a combination of different and larger
facilities as well as expanded transition services agreements to
support C&S and the addition of one dairy facility.
The amended divestiture package also expands the corporate and
office infrastructure provided to C&S given the increased store
set to ensure C&S can continue to operate the divested stores
competitively and cohesively. All fuel centers and pharmacies
associated with the divested stores will remain with the stores and
continue to operate.
The amended agreement maintains the divestiture of private label
brands Debi Lilly Design, Primo
Taglio, Open Nature, ReadyMeals and Waterfront Bistro to
C&S. The revised agreement also provides C&S with access to
the Signature and O Organics private label brands.
The updated plan will:
- Extend a competitor to new geographies through the sale of
stores to a well-capitalized buyer that is led by seasoned
operators with a strong balance sheet and a sound business
plan;
- Ensure that no stores will close as a result of the
merger;
- Maintain all current collective bargaining agreements, which
include industry-leading healthcare and pension benefits,
bargained-for wages, and ensuring frontline associates remain
employed; and
- Commit to invest in associates and stores for the long
term.
Subject to fulfillment of customary closing conditions,
including Federal Trade Commission and/or other governmental
clearance, and the completion of the Kroger-Albertsons merger,
C&S will pay Kroger an all-cash consideration of approximately
$2.9 billion, including customary
adjustments.
Merger creates meaningful benefits for customers, associates
and communities
The proposed merger with Albertsons Cos.
will produce meaningful and measurable benefits for customers,
associates and communities across the country. The combined company
committed that no stores, distribution centers or manufacturing
facilities will close as a result of the merger.
Customers will benefit from lower prices and more choices
following the merger close. Kroger committed to investing
$500 million to begin lowering prices
day one post-close, and an additional $1.3
billion to improve Albertsons Cos.' stores.
This commitment builds on Kroger's long track record of reducing
prices every year, with $5 billion
invested to lower prices since 2003. Customers will also have
access to more favorite items from their own communities, as Kroger
committed to increasing the number of local products in its stores
by 10 percent post-close. This merger creates more opportunities
for families to access the fresh, affordable foods they love.
As a combined company, Kroger committed to investing
$1 billion to raise wages and
comprehensive benefits. This builds on the incremental $2.4 billion Kroger invested to improve wages and
comprehensive benefits since 2018. To provide the best holistic
support for each associate, the company will also extend continuing
education and financial literacy benefits to all associates
following the merger close. As union membership continues to
decline nationwide, especially in the grocery industry, this merger
is the best way to secure union jobs. Kroger has added more than
100,000 good-paying union jobs since 2012.
The proposed merger will allow the combined company to invest
more deeply to end hunger in communities across America. In 2023,
Kroger committed to donating 10 billion meals to families across
the U.S. by 2030. Bringing these companies together provides one
more step toward achieving communities that are free from hunger
and food waste.
Kroger and Albertsons Cos. remain committed to defending the
merger in court and unlocking the many benefits it offers.
Read more about the combined company's commitment to customers,
associates and communities at www.krogeralbertsons.com
About Kroger
At The Kroger Co. (NYSE: KR),
we are dedicated to our Purpose: To Feed the Human Spirit™. We are,
across our family of companies nearly half a million associates who
serve over 11 million customers daily through a seamless digital
shopping experience and retail food stores under a variety
of banner names, serving America through food inspiration and
uplift, and creating #ZeroHungerZeroWaste communities by 2025. To
learn more about us, visit our newsroom and investor
relations site.
This press release contains certain statements that constitute
"forward-looking statements" within the meaning of federal
securities laws, including statements regarding the effects of the
proposed transaction and updated divestiture plan. These statements
are based on the assumptions and beliefs of Kroger and Albertsons
management in light of the information currently available to them.
Such statements are indicated by words or phrases such as "create,"
"committed," "expand," "establish," "ensure," "enhance," "extend,"
"completion," "continue," and "will." Various uncertainties and
other factors could cause actual results to differ materially from
those contained in the forward-looking statements. These include
the specific risk factors identified in "Risk Factors" in each of
Kroger's and Albertsons' annual report on Form 10-K for the last
fiscal year and any subsequent filings, as well as the following:
the expected timing and likelihood of completion of the proposed
transaction and updated divestiture plan, including the timing,
receipt and terms and conditions of any required governmental and
regulatory clearance of the proposed transaction and updated
divestiture plan and/or resolution of pending litigation
challenging the merger; the impact of the proposed updated
divestiture plan; the occurrence of any event, change or other
circumstances that could give rise to the termination of the
updated divestiture agreement; the outcome of any legal proceedings
that may be instituted against the parties and others following
announcement of the merger agreement and proposed transaction or
updated divestiture plan; the inability to consummate the proposed
transaction or updated divestiture plan due to the failure to
satisfy other conditions to complete the proposed transaction or
updated divestiture plan; risks that the proposed transaction
disrupts current plans and operations of Kroger and Albertsons
Cos.; the ability to identify and recognize the anticipated
benefits of the updated divestiture plan, including but not limited
to the ability to enhance competition in overlap geographies and to
address regulator concerns, create meaningful and measurable
benefits for America's consumers, Kroger and Albertsons associates,
and communities that both Kroger and Albertsons serve, expand
access to fresh, affordable food and establish a more compelling
alternative to large, non-union retailers, and commitment that all
frontline associates will remain employed, all existing collective
bargaining agreements will continue, and associates will continue
to receive industry-leading health care and pension benefits
alongside bargained-for wages; the ability of the combined company
to achieve its commitment that no stores, distribution centers or
manufacturing facilities will close as a result of the proposed
transaction, to invest $500 million
to begin lowering prices post-close, and an additional $1.3 billion to improve Albertsons Cos.' stores;
the amount of the costs, fees, expenses and charges related to the
proposed transaction or updated divestiture plan; and the ability
of Kroger and Albertsons Cos. to successfully integrate their
businesses and related operations; the ability of Kroger to
maintain an investment grade credit rating; risks related to the
potential impact of general economic, political and market factors
on the companies or the proposed transaction or updated divestiture
plan. The ability of Kroger and Albertsons Cos. to achieve the
goals for the proposed transaction may also be affected by their
ability to manage the factors identified above.
The forward-looking statements by Kroger and Albertsons included
in this press release speak only as of the date the statements were
made. Neither Kroger nor Albertsons assumes the obligation to
update the information contained herein unless required by
applicable law. Please refer to the reports and filings of Kroger
and Albertsons with the Securities and Exchange Commission for a
further discussion of the risks and uncertainties that affect them
and their respective businesses.
View original
content:https://www.prnewswire.com/news-releases/kroger-albertsons-companies-and-cs-wholesale-grocers-llc-announce-an-updated-and-expanded-divestiture-plan-302123299.html
SOURCE The Kroger Co.